Tata Steel KZN to pay back the money
Finally sold, the liquidated ferrochrome plant in Richards Bay will repay debt to City Municipality.
NOW that a 10-month liquidation process for Tata Steel KZN finally came to a close earlier this week, the company will need to churn out millions in debt to the City of uMhlathuze Municipality.
A bidding process by two interested companies, trading group Traxys Africa and XMoor Transport, for the 54.5-hectare Richards Bay ferrochrome plant was finalised in the Durban High Court on Monday when the sale was sanctioned to Traxys for R90-million.
In August last year, the looming closure of the company sparked fears that the City could lose R34-million accrued in services.
Questions were raised about incentives and the ‘deal’ struck with Tata at the commencement of its Alton smelter plant.
But City Chief Financial Officer Mxolisi Kunene said the debt fell under statutory security.
‘This is in terms of Section 118(3) of the Municipal Systems Act and in the case at hand, it means that the debt owing by Tata Steel KZN to the uMhlathuze Municipality enjoys preference above all other debt, including that of a bondholder.
Account will be settled
‘It is therefore expected that the full outstanding account will be settled before the transfer of the property will take place.’
Prior to the liquidation announced in September, Tata Steel committed to pay off approximately $35-million (about R470-million then) on account of the outstanding, making the liquidation proceeds firstly available towards costs, employees and other creditors.
Soon after news of the liquidation, Tata Steel KZN Managing Director Ashwani Kumar Lal explained the business had deteriorated in the past year from being uncompetitive to completely unsustainable owing to the spike in power tariffs as well as the drop in global commodity prices for its product.
The plant produced 150 000 tons of high carbon ferrochrome, exported to stainless steel manufacturers in Asia, Europe and the USA.
Its last product was shipped to customers in June, when stock ran out during the plant’s annual winter shutdown.
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